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The costs of unraveling FTX are accumulating at a staggering rate of up to $1.5 million per day, as legal experts and other professionals meticulously sift through the remains of the worldwide exchange.
The rising expenses became a focal point of dispute during a bankruptcy hearing held on Wednesday, as the committee of creditors expressed strong concerns about the current rate of expenditure.
“They've now moved to a pace of almost $50 million a month in fees, with literally hundreds of lawyers, financial advisors and bankers working on them practically full time,” said Kris Hansen, a lawyer from Paul Hastings representing the creditors’ committee. “Every dollar spent in the case is essentially a dollar that creditors don't receive.”
A report submitted eight weeks prior by a fee examiner employed at a different legal firm, which scrutinized the expenses over the initial seven-month period of the case amounting to $200 million, acknowledged the fees as “remarkable.” The report also commended the experts who delved into the “smoldering heap of wreckage” in order to reclaim funds for the creditors.
The immensely intricate bankruptcy proceedings are further convoluted by essential ancillary discussions involving other defunct crypto titans. For instance, a recent agreement with Genesis has enabled FTX's Alameda Research to assert a $175 million stake in Genesis during its insolvency proceedings. Additionally, FTX's financial records have been a subject of infamy since the outset. John J. Ray III, the CEO responsible for overseeing the winding-down process, candidly remarked that the records left behind by the prior FTX management were replete with falsehoods and deliberate concealment.
The representatives of the insolvent exchange claim that they have exerted “tirelessly” efforts and that the proceedings are still proceeding smoothly.
However, Hansen, who contended that the procedure for the potential relaunch of an FTX 2.0 is being unnecessarily prolonged and shrouded in excessive secrecy, also expressed the opinion that the consortium of debtors has not adequately exerted themselves to optimize the utilization of the company's cash and cryptocurrency assets throughout the duration of the case.
“Every day counts,” he said.
